Bollinger Bands Trading Strategy MASTERCLASS | Support and Resistance RSI | Stock Market | MACD

Bollinger Bands Indicator Bollinger Bands Indicator is so wrongly used by traders that they think that whenever the share price touches the upper band, they have to sell that share and whenever the share price touches the lower band, they have to buy that share which is very wrong. So what is the right way to use Bollinger Bands we will understand in this video. If you do trading, then you should learn every concept related to trading. Who knows which method works best for you. This is a technical analysis tool developed by John Bollinger in 1980s. This indicator is based on Simple Moving Average. There are three indicators which are upper band, middle band and lower band. Middle band is Simple Moving Average which is of 20 period in default setting. Upper and lower band is the standard deviation of Simple Moving Average. Standard deviation means how much upper or lower Simple Moving Average can go. So let's see Bollinger Bands in chart and understand how to use Bollinger Bands. But before that, if you haven't liked the video, then do like the video and also comment which strategy do you use for trading, which indicator or chart pattern do you use so that other people can also learn from it. So do comment your strategy. Now we are on the chart. If you want to use Bollinger Band indicator or any other indicator, then go to indicator section and search the name of the indicator. We have searched Bollinger Bands. Click on it. As soon as you click on it, Bollinger Band indicator has been applied on this chart. You can see that there are three bands in this chart. Upper band is upper band. Middle band is lower band. This is Simple Moving Average which is by default of 20 period. If you want to check in any indicator which setting has been used, then there is a setting option on that indicator. Click on it. You can see here that Simple Moving Average of 20 period is being used. Standard deviation here is of 2 period. Apart from this, you can see that the orange line is Simple Moving Average which is middle line which is also called basis. Upper line is upper and lower line is lower band. Bollinger Bands has been applied on our chart. Many traders feel that whenever the share price touches our upper band, then the share price falls. So, sell here. Whenever the share price touches lower band, then the share price can rise. So, buy here. This is a very wrong approach because when the share price touches upper band, then the share price will fall. Here, you can see that this is our middle band and this is our upper band and the share price touched the upper band here. Now, the traders who have wrong knowledge will think that the share price will fall below this. But after this, the share price increased very fast and if you would have traded in this way, then you would have lost a lot. When the share price touches lower band, then you can assume that the share price will fall. But you don't have to be confirmed only on the basis of this indicator. You have to use volume with this. For this, let's go back to the indicator section and search for volume. After applying volume, many things will be clear to you. Because here, the share price is touching the upper band but along with this, the volume is also increasing. You can see that after this, the share price can increase more because the volume is also increasing. And after touching here, you can see that the volume has decreased a little and after this, the share price has started to fall. So, if the share price is touching the upper band and the share price is increasing but along with that the volume is also increasing, then it means that the share price can increase more. And if the volume is decreasing compared to the previous increase, then it means that the share price has reached its peak. And now the price is falling, so you can sell here. Similarly, if we talk about buying, traders think that when the share price touches the lower band, then the price increases. As you can see here, after this, the share price was touching the lower band again and again but it didn't increase much. But after this, the share price fell very fast instead of increasing. So, if this strategy works somewhere, then the share price will fall so fast that whatever you have earned will go away at once. So, when the share price is touching the lower band, it does not mean that the share price can increase from here. So, when will you believe that the share price can increase? You will believe it when the share price starts increasing again and the previous volumes start decreasing. As you can see here, the share price fell and the volume also increased. So, if the share price is falling and the volume is increasing, it means that the price can fall more because more traders are taking interest in the stock and the interest here is negative. But as soon as the volume started decreasing and the price started recovering, we understood that the traders' interest in the stock is increasing. So, you can believe that the share price can increase. So, this is the first way to use the Bollinger band. The second way to use the Bollinger band is the Bollinger band squeeze. If you can see in the chart that both the bands of the Bollinger band are very close to the middle band and a squeeze like this has been formed, then there is a very high chance of a big movement in the share price and this movement will come up or down. You will know this when these bands start increasing again. So, here you can see that the share price was in a small range for a long time and here both the bands were very close to each other. So, after this, you can see that as soon as the band started increasing, there was a big movement in the share price along with it. Now, this movement may not seem big to you, so I will measure it and show you Here you can see that it was a movement of 11%. But keep in mind that you should not trade on the basis that the share price is going up only after seeing the squeeze. Along with this, you should at least use the volume. That is, the volume should also be increasing with it. Otherwise, you can be cheated in many cases. So, here you can see that the volume also increased with it and after that the share price increased. Along with this, the volume is also increasing so we can confirm here that the price can increase. Similarly, here you can see that the share price squeezed and after that the share price started increasing so there was a very fast movement in it and here also the volume increased in comparison to normal. Similarly, here you can see that the Bollinger band squeezed and after that the share price started falling and here you can see that the share price fell at this place Before this, the volume was 7,83,000 and here it increased to 1.8 million. So, you can see that the volume has increased. Along with this, the share price is falling after the squeeze so here the price can fall and you can see how much the share price fell after this. So, this is the second way to use Bollinger bands. Now let's talk about the third way. So, in this third way we will use our middle band. You know that our middle band is actually a simple moving average which is 20 period simple moving average. So, this works as a support. So, suppose you bought near the lower band because you saw that after coming here the share price started increasing again. Along with this, you saw that the volume is also increasing. So, if after this the share price crosses our middle band and goes up then it means that you can confirm that now the share price can increase more because now our middle range will work as a support and after this if you have bought then you can increase your position. And if the share price is falling and while falling the share price breaks our middle band then you can assume that the share price has broken its support and after this it has become its resistance. So, now the share price can fall more. So, you can increase your position here also. So, these three ways can be used for trading. Now, here you may have a doubt that you have used the daily candle so can we use it for trading also. So, here I was just giving you an example. If you do trading then you can use it in a 5-minute candle also. And there also these methods work well. But keep in mind that if you apply any method then first try it yourself. You feel that it is working properly. You have understood the thing properly. You are able to catch its accuracy. So, now you have to apply it. So, first you have to test it yourself. Whether you learn it from me or anyone else. So, now you know how to use Bollinger bands. So, now I will tell you a strategy in which we will use MACD indicator along with Bollinger bands and we will use volume also. But before that if you have not subscribed to our channel then please do subscribe. And yes, if you have not commented then do comment and let us know. Also, if you want to open the best Demat account for trading then I have given some good Demat account links in the description. So, do check the description also. So, here we have applied Bollinger band indicator. Now we will add MACD Go to Indicator section and write MACD and click on it. Now our MACD indicator has been applied. If you want to know about MACD indicator in detail then you can search for Neeraj Joshi MACD on YouTube and then you can watch this video. For now I will tell you that our MACD indicator has blue color line this is our MACD line and orange color line is our signal line. So whenever our MACD line cuts the orange color line upwards then it is a bullish signal and when our blue color line cuts the orange color line downwards then it is a bearish signal. So in this strategy if you notice that the share price is increasing after touching lower band then our MACD line has cut the signal line upwards and if the volume is also increasing then you can confirm that the price can increase after this and the place where our MACD line cuts the signal line upwards you can buy there. So all these three conditions were meeting here so in this case you can buy here and for stop loss you can put your stop loss at the lowest point or a little below that. and for target where our MACD line cuts the signal line downwards you can take your target here and if you notice that the share price is coming down after touching upper band and our MACD line has cut the signal line downwards and if the volume is also increasing then you can sell there or you can buy put option and for stop loss you can put your stop loss at the lowest point and for target where our MACD line cuts the signal line upwards you can buy there and in this case you can buy here. So this is how you can trade using MACD and Bollinger bands I hope you liked this video if you liked this video and want to know more about MACD then you can watch this video and if you want to learn about complete technical analysis then you can watch this video and also subscribe to our channel and like this video and DMAT account links are given in the description so do check the description too. Thank you.